South Dakota Vehicle Sales Tax: Rates, Credits and Exemptions

What most people call South Dakota vehicle sales tax is a motor vehicle excise tax: 4 percent of the purchase price, paid to the county treasurer when the vehicle is titled. The state charges it instead of sales and use tax, so a vehicle taxed this way does not also carry sales tax.

This guide explains how the tax is figured: what counts as the purchase price, how private sales are valued, the credit for tax paid in another state, which transfers are exempt, how leases are taxed and what titling late costs. Every rule comes from South Dakota's codified laws (SDCL), its administrative rules (ARSD) or the Department of Revenue (DOR).

Does South Dakota Charge Sales Tax on Vehicles?

No. South Dakota's excise tax law, SDCL 32-5B-1, imposes a tax of 4 percent on the purchase price of any motor vehicle bought or acquired for use on the state's roads that has to be registered here, in place of the sales and use taxes that would otherwise apply. Failing to pay the full amount is a Class 1 misdemeanor.

It is not collected like sales tax at the point of sale. The DOR's tax fact on motor vehicle sales says dealers are not required to collect or pay it on the vehicles they sell, and the law has it paid to the county treasurer in the county where the new owner lives (SDCL 32-5B-10). No title can be issued or transferred until it is paid (SDCL 32-5B-14), so it is settled as part of the title application.

How Is the 4 Percent Excise Tax Calculated?

As 4 percent of the purchase price, and the state's purchase price definition (SDCL 32-5B-4) sets that figure by type of sale:

• A new vehicle. The total consideration, in money or otherwise, minus the trade-in allowance the seller gives on any vehicle taken in trade.
• A used vehicle from a licensed dealer. The total consideration minus the dealer's trade-in allowance, which leaves the net consideration.
• A used vehicle from anyone else. The total consideration minus any trade-in, documented on the state's bill of sale, as the next section explains.
• A gift or a nominal price. The manufacturer's suggested dealer list price for a new vehicle, or the retail value in a nationally recognized dealers' guide for a used one, unless the transfer is exempt.

Trade-ins come with conditions. Under ARSD 64:29:02:14, a trade-in reduces the price only when it is titled in the same name as the vehicle being bought, or, for a vehicle titled to a company, when the buyer is its majority owner. An insurance check meant to cover damage to the traded-in vehicle can count toward its trade-in value (SDCL 32-5B-4.1).

Some extras are part of the taxable price. The DOR's tax fact lists an extended service contract sold with the vehicle as subject to the excise tax, while interest charges and credit life, disability, GAP and mechanical breakdown insurance are exempt.

How Are Private Vehicle Sales Taxed in South Dakota?

On the price, as long as the state's bill of sale backs it up. For a used vehicle sold by anyone other than a licensed dealer, SDCL 32-5B-4 taxes the total consideration less any trade-in and has the buyer and seller submit to the county treasurer a bill of sale approved and supplied by the Secretary of Revenue. That is the DOR's Bill of Sale, Form 1025. Without it, the tax is assessed on the retail value in a nationally recognized dealers' guide, and a trade-in is then valued at its guide retail value too.

State rules (ARSD 64:29:02:01.01) require a bill of sale to show the model year, make, model and VIN, the buyer's full name, the sale date and the price in U.S. dollars, signed by every titled owner who has to assign the title. Form 1025 covers those details, and the seller signs it under penalty of perjury. It also has a box for the vehicle's condition at the time of sale, and its instructions explain why: when the price looks like no or nominal consideration next to the vehicle's current retail value, tax is due on the retail value unless the condition described explains the price.

A buyer who already paid on the guide value can still recover the difference. ARSD 64:29:02:03.03 lets someone who bought a used vehicle from a private seller, and paid tax on the dealers' guide value, apply for a refund when the actual price was lower and they obtain a valid bill of sale. The DOR's Refund Request, Form 1600, includes a 4 percent excise tax refund option and goes to the county treasurer.

The reported price carries legal weight. SDCL 32-5B-9 has the new owner give the county treasurer the full purchase price, how it was computed and any trade-in allowance, and intentionally falsifying that information is a Class 6 felony.

Do You Pay South Dakota Tax on a Car Bought or Taxed in Another State?

Not twice. The credit statute, SDCL 32-5B-11, says no South Dakota tax is owed on a vehicle already subjected to a sales, use, motor vehicle excise or similar tax that the applicant paid to South Dakota or another state, and that no tax or refund is due when the amount paid is the same as or more than South Dakota's tax. When the other state's rate was lower, or it charged no tax, the DOR's motor vehicle FAQ says you pay the difference.

The credit depends on proof. The law has the county treasurer require a licensed dealer's affidavit, a bill of sale, a receipt or other tangible evidence of the tax paid, and ARSD 64:29:02:08 asks that it show the amount and rate of tax charged and paid, the names and addresses of the buyer and seller, the sale date and the vehicle's make, model, year and VIN. The same rule allows reciprocity on a title in your name from a state that charges a similar tax in an equal amount.

To claim it, the DOR's Tax Payment Verification, Form 1007, goes in with the title application. The form says the out-of-state title must be in the applicant's name, and it takes a receipt from the other state's tax office or an out-of-state dealer's tax form as proof.

Without enough proof, the treasurer collects the full 4 percent on the vehicle's retail value in a national valuation service as of the day it entered South Dakota. Proof that turns up later still helps: ARSD 64:29:02:04 lets you apply for a refund when you present proof of tax paid in another state to the county treasurer afterward. One limit applies: a vehicle taxed or credited under this rule that is sold or traded does not qualify again if the same applicant buys it back.

For a car you bring from New York, the numbers usually line up. New York's state sales tax rate is 4 percent before any local tax, according to the New York State Department of Taxation and Finance, so a car bought and taxed there has usually already met South Dakota's rate, and the DOR gives new residents 90 days from arrival to title it. Our guide to registering an out-of-state car in South Dakota covers that county treasurer visit.

Buying in New York while already living in South Dakota is different, because New York decides first whether to charge its own tax. A New York dealer charges New York sales tax unless you qualify for its nonresident exemption on Form DTF-820, and if you do, the full 4 percent is due here at titling. Our guide to New York's nonresident exemption for dealer purchases explains the conditions. In a private sale the New York seller collects no sales tax, so South Dakota's 4 percent applies to the bill of sale price, or to the guide value without one.

Which Vehicle Transfers Are Exempt?

The exemption list in SDCL 32-5B-2 runs to 20 numbered items, most of them business transfers. The ones that matter to most owners are:

• Family transfers without payment. Between spouses, between a parent and child, and between siblings, when no money changes hands. The DOR FAQ notes that the $10 title fee still applies, and SDCL 32-5B-18 counts siblings by blood, marriage or adoption.
• Inheritance. A vehicle acquired by inheritance from, or bequest of, a person who has died.
• Joint owners. A vehicle titled jointly that passes without consideration to one or more of the people already on the title.
• Older, low-priced vehicles. A vehicle 11 or more model years old that is sold or transferred for $2,500 or less before trade-in.
• Returning residents. A former South Dakota resident who moves back and already paid South Dakota excise tax on the vehicle, as shown in DOR records or other acceptable proof.
• Trusts. A transfer from a trustor to a trustee, or from a trustee to a beneficiary of the trust.
• Lenders and insurers. A vehicle a lienholder takes in satisfaction of a debt, and a damaged vehicle transferred to an insurance company to settle a claim.

A gift outside those family relationships is taxed on the list price or guide retail value described above.

How Are Leased Vehicles Taxed?

Leases have their own rules. For a vehicle leased for more than 28 days, SDCL 32-5B-1.1 has the leasing company title and license it with the lessee named on the application, and either the lessor or the lessee pays the 4 percent. For a closed lease, the taxable amount is the total consideration: every lease payment, plus cash, rebates, the net trade-in, extended warranties and administrative, acquisition or other fees.

An open-ended lease, or one whose terms are not certain when it is signed, adds the vehicle's purchase price to those amounts. Neither type counts title and registration fees, the excise tax itself, federal excise taxes, insurance or refundable deposits (SDCL 32-5B-4).

Extending a lease or paying extra consideration during it or at its end is taxed on the added amount, paid by the lessor, and buying the car when the lease ends is taxed on the purchase price. Ending a lease early brings no refund of tax already paid (SDCL 32-5B-22). A vehicle that arrives under a lease from another state is taxed for the remaining lease period, with credit for tax paid to the other state on that lease if the lessor and lessee stay the same (SDCL 32-5B-23).

The DOR has a worksheet for each case: the Out-of-State Vehicle Lease Tax Worksheet (Form 1027), the Closed Lease Tax Worksheet (Form 1028) and the Extended or Additional Consideration Lease Tax Worksheet (Form 1029). The first two go to the county treasurer with the title paperwork, and Form 1029 goes to the Motor Vehicle Division with the fees.

What Happens If You Title the Car Late?

Charges start after 45 days. The DOR's buyers and sellers guide says a vehicle you buy must be titled within 45 days of the purchase date and that all fees are assessed from that date, whenever you apply. Its FAQ adds that there is no extension. Three charges can follow:

• Interest. The state's general tax interest law, SDCL 10-59-6, which covers the vehicle excise tax, sets it at 1 percent of the tax or $5, whichever is greater, for the first month and 1 percent a month after that. The DOR applies it to applications made more than 45 days after the purchase and does not charge interest on interest.
• Penalty. The DOR adds a one-time penalty of 10 percent of the tax or $10, whichever is greater, to any application made more than 60 days after the purchase.
• Late title fee. $1 for each week past the 45 days, up to $50.

Those clocks count from the purchase date. A new resident bringing a car already titled and licensed in another state has 90 days from arrival instead, according to the DOR FAQ.

The 45 days keep running while a car you bought is on a truck, so a South Dakota resident buying in New York should count from the sale date, not the delivery date. Rivalane coordinates door to door transport from New York to South Dakota with licensed, insured carriers. A carrier is typically confirmed within three working days of booking, and once the car is loaded, delivery usually follows in 4 to 6 days, though pickup and delivery dates are estimates, not guarantees. Our page on shipping a car from New York to South Dakota covers the I-90 lane, our South Dakota car shipping page covers deliveries across the state, and the shipping cost calculator prices the move.

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